Four Quadrants of Innovation. Incremental versus Disruptive by Hutch Carpenter I recently wrote up a post, “Innovation Perspectives – No Shooting Stars.” In it, I discussed the issue of organizations myopically focusing on only disruptive innovations to the exclusion of more incremental or sustaining innovations. In doing more research on the subject, I began thinking about the dynamics that apply when a firm pursues different kinds of innovation. A post by Venkatesh Rao, Disruptive versus Radical Innovations, was very useful for distinguishing between disruptive and radical innovations. Building on that, I wanted a framework for delineating innovations based on their technology and business impacts. Because they’re not necessarily the same. In each quadrant, there are different rationales and issues that apply. Existing Tech, Manage Existing Market The lower left quadrant represent innovations that leverage existing technology, and service existing customers.
Example? Wal-Mart’s efforts have paid off. Strategy is the story | Strategy is the story. Strategy and entrepreneurship It may not be in the job description for most CEOs, but Freek Vermeulen says that a good leader must also be a good storyteller. Rest assured: we’re not making this up. Stevie Spring, who recently stepped down after a successful stint as CEO of Future plc, the specialty magazine publisher, once told me, “I am not really the company’s CEO; what I really am is its Chief Story Teller.” What she meant is that she believed that telling a story was her most important task as a CEO. Not fiction All successful CEOs whom I have seen were great storytellers. When I say this, I am not implying that CEOs need to engage in fiction, nor do they need to be overly dramatic.
First, the story must provide clear choices. Moreover, it has to be clear how the choices made by the company’s leaders hang together. Second, the story must tie to the company’s resources. Additionally, the company had a great design capability in its hometown of Margate. Only a beginning. The Five Competitive Forces That Shape Strategy. Editor’s Note: In 1979, Harvard Business Review published “How Competitive Forces Shape Strategy” by a young economist and associate professor, Michael E. Porter. It was his first HBR article, and it started a revolution in the strategy field. In subsequent decades, Porter has brought his signature economic rigor to the study of competitive strategy for corporations, regions, nations, and, more recently, health care and philanthropy.
“Porter’s five forces” have shaped a generation of academic research and business practice. With prodding and assistance from Harvard Business School Professor Jan Rivkin and longtime colleague Joan Magretta, Porter here reaffirms, updates, and extends the classic work. He also addresses common misunderstandings, provides practical guidance for users of the framework, and offers a deeper view of its implications for strategy today. In essence, the job of the strategist is to understand and cope with competition. Forces That Shape Competition. The Great Repeatable Business Model. Idea in Brief Really successful companies build their strategies on a few vivid and hardy forms of differentiation that act as a system and reinforce one another.
They grow in ways that exploit their core differentiators by replicating them in new contexts. And they turn the sources of their differentiation into routines, behaviors, and activity systems that everyone in the organization can understand and follow. Powerful differentiations deliver enduring profits only when they are supported by simple, nonnegotiable principles and robust learning systems that drive constant improvement across the business.
Differentiation is the essence of strategy, the prime source of competitive advantage. You earn money not just by performing a valuable task but by being different from your competitors in a manner that lets you serve your core customers better and more profitably. The sharper your differentiation, the greater your advantage. You can find high performers like these in most industries. Your Competitive Strategy – what direction is it taking you? During the last two decades the political, economic and technological developments have changed the world like never before in human history. Starting with the collapse of USSR and the end of bi-polar world political order, the world politics started converging. This gave momentum to coordinated global economic efforts and the formation of World Trade Organization.
The liberalization of economies and reduction in trade barriers, coincided with the emergence and embracing of Internet globally, and helped shape the world that we are in today. The globalization of markets, rapid removal of trade barriers helped many large markets to open up for new competition. The advances in the Internet, and related communication technologies, helped the economic integration as well as made the scale of market competition global. As the creation of knowledge became more accessible the information that was exclusive to incumbents became available to all. . #1. . #2. . #3. What about the Competition? « Five Whys. Whatever happened to building strategic competitive advantage? With all the talk of business model generation, lean startups and customer development you might be forgiven for having thought that competitive advantage was all a bit last season. If you spent good money on a business degree that taught you otherwise, never fear.
All is not forgotten. Alex Osterwalder, author of Business Model Generation, has had some interesting thoughts on competition. Both Steve Blank‘s customer discovery and Eric Ries‘s lean startup have you iterate through a bunch of business models until you find something that works. Starting with an idea to develop a lesson plan exchange for teachers, you might try out some simple (and testable) hypotheses to find out if there is a problem worth solving, and whether or not your idea is up to the job. But when should you test for competitive advantage? Unfair Advantage Summary Like this: Like Loading... Competition Is NOT Part of Your Business Model. Every couple of weeks somebody sends me an email writing that I'm missing a building block in the Business Model Canvas. Often, they point out that competition is missing. They're wrong. "Competition" is not a business model building block, it's part of the environment in which you design your business model.
Though I believe we're too obsessed with competition, it would obviously be naive not to take into account existing or potential competitors when you design your business model. We came up with this environmental model, because there was no concept out there that looked at the Business Model Design Environment in a simple, holistic, and visual way.